Simulation

Simulation in Swiss contract law means that the parties intentionally create an apparent legal act that does not reflect their true will. The simulated transaction is generally ineffective between them. If the apparent act conceals a different, genuinely intended transaction, that hidden transaction may be valid if it satisfies the substantive and formal requirements applicable to it. Simulation is relevant to evidence, third-party protection, tax and enforcement questions. It must be distinguished from mistake, sham negotiations and lawful use of contractual forms.